Happy Forgings Limited

Industrials — Metal Fabrication · NSE

₹1,860.00−₹13.20 (−0.70%)

DalalBaazaar Score

60 / 100

🟢 Good

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:47 pm

Understanding the Business

Company site ↗

The 60-second version of Happy Forgings Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Happy Forgings Limited manufactures and sells forgings and machined components for the automotive and industrial sectors in India and internationally.

IndustryMetal Fabrication

SectorIndustrials

Employees3,512

Annual revenue₹1,423 Cr

How does it make money?

Turns over ₹1,423 Cr a year. Of every ₹100 of sales, about ₹21 reaches shareholders as profit, with ₹34 left at the operating level before interest, tax and depreciation. Each of its 3,512 employees supports ₹40.5 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹40.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, HINDALCO INDUSTRIES LTD, VEDANTA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 18.9% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE18.7%

What is the outlook?

5 analysts covering the stock expect revenue to grow about 21.5% and earnings to grow about 25.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+21.5%

Est. earnings growth+25.9%

Analysts5

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +33% while net margin moved +9% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+33%

Margin effect+9%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 53.8x is demanding — it needs sustained high growth to justify
✗ P/E is 26% above its own historical median of 42.5x — expensive by its own standards
✗ P/B of 8.25x is a steep premium to book

Quality vs. Valuation

Company Quality

68/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

23/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

53.8x

3Y Median

42.5x

36 monthly readings · mean 44.6x · range 29.8x–75.6x

Sector Median

12.2x

median of 4 sector peers

⚠️Current valuation is approximately 26% above its 3y median of 42.5x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 342% above the peer median of 12.2x.

vs. its own history

Expensive

42.5x median over 36 months · +26%

vs. sector peers

Expensive

12.2x median of 4 peers · +342%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

36.4x

PEG

4.12

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 32.6% to 34.5% over 3 years.
Very low debt
Debt/Equity of 0.15x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 21.1% to 14.2% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 27.3% to 18.9% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 51% over 3 years, from ₹219 Cr to ₹330 Cr.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹17 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.9% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 32.6% to 34.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The price already assumes success
The stock trades 26% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 21.1% to 14.2%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 32%✓ 34.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹17 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 7% a year✓ 9.8% CAGR
Latest reported year was 27.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 0.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 18.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹17,559 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

53.8x

Expensive

Expensive — verify against sector peers

P/B Ratio

8.25x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹34.6

Profitable

Profitable on a per-share basis

ROE

14.2%

Moderate

Moderate capital efficiency

ROCE

18.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.15x

Low

Conservative leverage

Revenue Growth (YoY)

27.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

39.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.22%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹17 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

36.8x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

25.5%

Good

Healthy core-business profitability

Net Margin

19.9%

Good

Strong bottom-line conversion

Current Ratio

2.35

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.88

Market-like

Moves roughly in line with the market

52W Range Position

60%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

2005.8 / 2109.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

29.1

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,074 Cr	₹1,243 Cr	₹1,296 Cr	₹1,423 Cr	+9.8%
EBITDA	₹350 Cr	₹398 Cr	₹436 Cr	₹491 Cr	+11.9%
EBITDA Margin	32.6%	32.0%	33.7%	34.5%	—
PAT (Net Profit)	₹209 Cr	₹243 Cr	₹267 Cr	₹302 Cr	+13.1%
EPS	₹22.15	₹25.79	₹28.37	₹31.92	+12.9%
ROE	21.1%	15.1%	14.5%	14.2%	—
ROCE	27.3%	20.4%	19.4%	18.9%	—
Total Debt	₹219 Cr	₹143 Cr	₹228 Cr	₹330 Cr	+14.7%
Free Cash Flow	₹35 Cr	-₹5 Cr	₹11 Cr	-₹17 Cr	—

🟢 Revenue has grown at 9.8% a year over 3 years.

🟢 EBITDA has grown at 11.9% a year over 3 years.

🟢 EBITDA Margin has risen from 32.6% to 34.5% over 3 years (+1.9 pts).

🟢 PAT (Net Profit) has grown at 13.1% a year over 3 years.

🟢 EPS has grown at 12.9% a year over 3 years.

🔴 ROE has fallen from 21.1% to 14.2% over 3 years (-6.9 pts).

🔴 ROCE has fallen from 27.3% to 18.9% over 3 years (-8.4 pts).

🔴 Total Debt has grown at 14.7% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹35 Cr to -₹17 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,633 Cr

Total Liabilities

₹505 Cr

Cash & Equivalents

₹26 Cr

Operating Cash Flow

₹445 Cr

Capex

-₹461 Cr

Shareholding (proxy)

Institutional Holding

15.2%

Insider Holding

78.5%

Corporate Actions

Dividend Rate

₹4

Ex-Dividend Date

20 Jul 2026

Analyst Consensus

Recommendations

6 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹2,047.43

+10.1% vs CMP

Target Range

₹1,493 – ₹2,450

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
HINDALCO INDUSTRIES LTD	12.3x	12.0%
VEDANTA LIMITED	10.4x	18.7%

Recent News

5 mixed1 general

Happy Forgings (NSEI:HAPPYFORGE) Stock Forecast & Analyst Predictions

Simply Wall Street, 08 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Happy Forgings share price target: 'Industrials, PVs to drive next leg of growth' - Buy from Motilal Oswal Fin Services

Livemint, 17 SeptAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Happy Forgings - FIIs turn buyers after two quarters of selling; 13 stocks rally up to 665%, 5 become multibaggers

The Economic Times, 03 Aug

HAPPYFORGE Forecast — Price Target — Prediction for 2027

TradingView, 26 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Happy Forgings Shares Rise As Motilal Oswal Maintains 'Buy'; Sees 18% Upside — Check Target Price

NDTV Profit, 16 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Happy Forgings Limited Just Beat EPS By 10.0%: Here's What Analysts Think Will Happen Next

Simply Wall Street, 07 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth

MiddlingProfitability · Risk

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑